OECD: UK receives lowest level of R&D support than any other economy

Britain's small and medium-sized firms receive the lowest level of government
support for R&D funding than any major economy, an analysis by the
Organisation for Economic Co-operation and Development has revealed.

Britain receives the lowest level of R&D funding support compared to any other major economy, an OECD analysis reveals.Photo: Alamy

The lack of taxpayer support over the past decade may have “eroded” Britain’s competitive edge, given that R&D capital is seen as one of the major drivers of economic productivity, the OECD said.

The study, based on spending figures from 2008-9, shows the UK ranks last for funding support out of all 27 OECD countries, including America, France and Germany.

British firms with fewer than 50 employees fare the worst, while those with between 50 and 249 workers attract only marginally more support, according to the report.

The OECD said that indirect government support, such as through R&D tax incentives, ranks higher than America, but it is still way below that of Canada and France.

The OECD said the decline in R&D spending in Britain is largely “historical”. The share of R&D expenditure in output fell from around 2.2pc in 1985 to 1.8pc in 2010, with both public and business R&D contributing to the decrease.

Since 2009, the coalition Government has taken steps to increase support for R&D by small firms, including increasing the rate of relief under the tax credit scheme to 225pc from last April; one the of the most competitive rates in the world. It has also ring-fenced the £4.6bn annual science and research budget amid austerity cuts.

But, the OECD report said: “There are concerns that the failure to maintain and expand the research capacity over this period at the same rate as elsewhere may have eroded the United Kingdom’s competitive edge.

"The United Kingdom may find it more difficult to take a leading role in the next product innovation cycle.”